Think Tanks in the United Kingdom and Germany: Actors in the Modernisation of Social Democracybjpi_

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1 doi: /j X x BJPIR: 2010 VOL 12, Think Tanks in the United Kingdom and Germany: Actors in the Modernisation of Social Democracybjpi_ Hartwig Pautz This article describes and analyses the role that think tanks in the United Kingdom and Germany played in the modernisation of the British Labour party and the Social Democratic party of Germany between 1992 and In these years, both parties were de-traditionalised. Especially, their central objective, that of achieving a socially just society, was redefined under the banner of the Third Way. Policy experts from outside the political parties played an important role in this process. The article discusses what a think tank is and whether in times of paradigmatic crisis actors external to a political party can exert influence on the parties policy objectives and thus supersede internal policy-making institutions. It also analyses, in comparative perspective, the conditions in which think tanks in both countries can be most effective. Keywords: think tanks; Labour party; SPD; policy advice Introduction This article looks at the role of think tanks in the modernisation debates of the British Labour party and the Social Democratic party of Germany (SPD) between 1992 and During this period, after many years in the electoral wilderness and in programmatic disarray, both parties underwent a modernisation process understood as the reprogramming of organisational goals with the aim of adapting to the political environment (Weßels 2001, 43). This modernisation was shaped both by party-internal procedures committees, policy fora and programme commissions and by experts from outside the parties whose expertise, at times, circumvented and overrode the official internal policy and programme-making institutions. The modernisation process was aided by the strengthening of party elites in both parties through various organisational changes (Jun 1996). This article highlights, in particular, if and how external expertise from think tanks was relevant in this modernisation process. By doing so it addresses a gap in the literature in a variety of ways: firstly, it describes in detail how think tanks were active agents of change within specific larger socioeconomic conditions of action (Mahoney and Snyder 1999). Most academic research pays only scant attention to what it was that think tanks actually contributed to a particular discourse and how they did it. Secondly, the study is based on a new, broader definition of what constitutes a think tank, thus reflecting the changing nature of think tanks. Thirdly, the study is underpinned by a number of theoretical concepts which help us to understand how think tanks do what they do. It is guided by Peter Hall s notion that

2 THINK TANKS IN THE UNITED KINGDOM AND GERMANY 275 experts external to organisations can produce momentum for what he calls third order change of policy objectives (Hall 1993). While Hall discussed the power of external expertise and paradigmatic change in relation to government and civil service, this study looks at political parties and investigates Winand Gellner s claim that in crisis situations such as repeated electoral defeat political party elites use external expertise to control policy and programme modernisation (Gellner 1995). Marten Hajer s concept of the discourse coalition is used to explain how think tanks as physical locations in a network of a variety of actors can become effective (Hajer 1993). Lastly, the study is novel because it compares think tanks in two different European polities which were chosen according to a number of interlinked criteria. The conditions in which think tanks were active were similar in the UK and Germany: two centre-left political parties were searching for a path towards modernisation in comparable circumstances after the breakdown of Keynesian liberal corporatism (Van der Pijl 1998) and under the conditions of permanent austerity of the welfare state (Pierson 2001). These conditions contributed to a redefinition of the centre-left s central policy objective of social justice under the banner of the Third Way in the 1990s and 2000s. The UK and Germany were at the forefront of this revisionist debate in Europe s centre-left (Cuperus and Kandel 1998; Barrientos and Powell 2004). To different degrees and with varying success, Tony Blair and Gerhard Schröder as party leaders modernised Labour and the SPD, respectively, before coming to governmental power and/or during holding office. Under their governments, both countries witnessed a merger of labour market and welfare policy into what Bob Jessop calls productivistic social policy (Jessop 1994) which oscillates around welfare-to-work, make-work-pay and human capital investment discourses. The modernisers adopted a new concept of the welfare state which has been variously termed the activating, enabling or social investment state. While the traditional social democratic Keynesian welfare state focused on the redistribution of income, wealth and power with the aim of greater equality of outcome and de-commodification, the modernisers defined social justice no longer as the multidimensional equity of resources but as the continuous redistribution of opportunities to (re)integrate the economically inactive into the labour market and thus, by implication, into society. Ruth Levitas identified this discourse as the social integrationist as opposed to the traditional redistributive social policy discourse (Levitas 1998). It deviates substantially from traditional social democratic principles so that it is justifiable to speak of a third order change with regards to Social Democrats central policy objective (Pautz 2009). Additionally, the UK and Germany were chosen because, unlike for example in France and most other European countries (e.g. Stone and Denham 2004; McGann and Johnson 2005; Williams 2008), party modernisers actually had the opportunity to involve think tanks in the modernisation process as they could resort to an extensive and active think tank landscape. Methodologically, the study is approached through 35 semi-structured interviews with (former) analysts from think tanks, former members (often senior academics) of commissions or working groups set up by think tanks, and politicians from both parties carried out between 2004 and Furthermore, political party publications such as policy review documents, party programmes and election manifestos were analysed.

3 276 HARTWIG PAUTZ Defining Think Tank Given the variety of organisations that give policy advice it is important to define what is meant by think tank. While in the English-speaking world the term used to evoke images of scientific detachment and objectivity, in Germany the term is popular with more recent advocacy-oriented policy research institutes but sometimes still frowned upon by organisations thriving on their ostensibly scholarly disposition. Thus, the understanding of what constitutes a think tank is highly reflective of the socio-political context in which think-tanks were first constituted (Stone 2007, 260). For this study think tanks were defined as non-governmental institutions, independent from government, political parties or organised interests. They want to influence policy, but have no formal decision-making power; they lay claim to political neutrality while often not making a secret of their ideological standpoints. Some carry out little research themselves and commission external experts or recycle existing research while others have considerable internal research capacities. Furthermore, think tanks want to change policy through intellectual argument rather than through behind-the-scenes lobbying. They advocate ideas, maintain and develop policy networks and provide expertise to policymakers (Stone 2000). They inform decision-makers about policy developments in other countries and can play a role in transnational policy transfer networks (Evans and Davies 1999). Most research defines think tanks as not-for-profit organisations. However, this criterion implies that only financial profit motives may compromise the independence of a think tank. Other motives to engage with decision-makers and other power-holders like wanting to gain access to valuable government data, seeking (in)formal positions within the client organisation or stimulating government s interest in commissioning policy evaluation also have a potential impact on the intellectual independence of a think tank and on the relationship between think tank analyst and those advised (Pautz 2008a). The not-for-profit criterion constructs a false dichotomy between think tanks with charitable status and organisations like management consultancies or university-affiliated institutes when all three types of organisation may fulfil the same tasks. Instead of the not-for-profit criterion the term financial autonomy is preferable if defined as being not dependent on one single benefactor. Arguing with Hall, think tanks can become significant agents of change when a policy paradigm is seen as failing and the usual agents of change in Hall s study on welfare policy change this is the civil service are seen as incapable of dealing with the situation. Third order change Hall uses this term to describe changing policy objectives as opposed to merely changing policy instruments to reach the same goals can be the consequence when external actors are given the opportunity to contribute their expertise. As Hall says, a new policy network can spring up and, with new actors, may give the policy process a different direction (Hall 1993). Since studying think tanks means studying ideas, structures and agency, it is important to have a model of the policy process. This article understands think tanks as one agent among many in a particular discourse coalition a variant of the policy network concept (e.g. Marsh and Rhodes 1990). A discourse coalition, according to Hajer, is the ensemble of a set of storylines, the actors that utter these storylines, and the practices that conform to these storylines, all organized around

4 THINK TANKS IN THE UNITED KINGDOM AND GERMANY 277 a discourse (Hajer 1993, 47). The discourse coalition concept focuses on the nexus of power and knowledge and its relevance for policy change and continuity. A wide range of actors, not necessarily known to each other, are responsible for the (re)production of policy discourses. Central to Hajer s concept is the notion of the storyline: a linguistic mechanism around which discourse coalitions assemble, a generative sort of narrative that allows actors to draw upon various discursive categories to give meaning to specific or social phenomena (Hajer 1995, 56). For this study, the concept of the activating or social investment state was identified as such a storyline. A discourse coalition is held together by its members shared belief in an interpretation encapsulated in the Third Way of a threat, crisis or event that constructs the nature of the policy problem under consideration (Hajer 1995, 247). A think tank can contribute with its expertise to the construction of such an interpretation and thereby to the (re)production of the hegemony of one discourse coalition over another. Whether or not a think tank is successful in its task of producing a hegemonic discourse can be assessed through the concordance method (Yee 1996). This method does not establish causal relationships between, for example, policy advice and policy outcomes but looks at the congruence of think tank output and policy outcomes to make cautious statements about the relevance of a think tank s activity. The Literature The literature on think tanks in the UK is, in general, more developed than that on German think tanks although there is a notable lack of published research on more recent developments. Academic interest was at its peak during the 1980s and 1990s when think tanks were analysed as significant agents of change in the development of the neo-liberal socioeconomic paradigm associated with the New Right (Desai 1994; Cockett 1995; Denham and Garnett 1998). Scholars took an interest in how the Keynesian paradigm had been intellectually disgraced, and identified intellectuals and think tanks as second-hand dealers in ideas (Hall 1988). This debate was not continued with regards to the modernisation of the Labour party. Exceptions here are an analysis by Andrew Denham and Mark Garnett of centre-left think tanks in which they speak of a fourth wave of think tank development which was ideologically less clear-cut than the think tanks of the New Right or the third wave of the 1970s (Denham and Garnett 1996). Justin Bentham (2006) and Robert Blank (2003) came to the conclusion that think tanks served as important locations for Labour modernisers and that they, first, contributed to the construction of a new social democratic narrative and thus supported the party leadership in their efforts to convince the public of Labour s modernity and, second, attracted new policy field stakeholders to the New Labour coalition from, for example, the business community. Besides the Institute for Public Policy (IPPR), Demos and the Centre for Economic Performance (CEP) these organisations are at the centre of this study because of their strong relevance to the processes under scrutiny there are further think tanks that can be considered as politically on the centre-left but which were not found as having been of similar relevance in the

5 278 HARTWIG PAUTZ process as the three think tanks named above. The Social Market Foundation, founded in 1989 by members of the disbanded Social Democratic party, has over time, been described variously as John Major s favourite think tank, a free market think tank and as a supporter of New Labour s policy agenda (Castle 1995) without ever having been part of the inner New Labour think tank circle. The New Policy Institute, founded in 1996, was close to Tony Blair (Stone 2001) but became critical of New Labour s social policy approaches relatively soon after the 1997 elections. The labour movement oriented campaigning think tank Catalyst (1998) is committed to a redistributionist agenda, is dominated by Labour party members and left-leaning academics and can be considered a reaction to the centrist shift of Labour. The last in the list of more recent think tanks associated with the Labour party is the John Smith Institute (1997), named in memory of the late Labour leader. Because of its close links to Gordon Brown s Treasury in 2008 the Charity Commission ruled that the think tank had strayed too far from its educational remit by hosting events at 11 Downing Street. The Commission did not support the claim that Brown used the institute to further his political aspirations (Charity Commission 2008). As this article will show with respect to Labour and the SPD, a political party s electoral defeat and programme and policy uncertainty can lead to an upsurge in think tank activity and can spur a growth in think tank numbers. A number of think tanks close to the Conservative party have emerged in the wake of the party s electoral decline and programmatic difficulties since the mid-1990s. For example Civitas (2000) is an explicitly anti-étatiste advocacy offspring from the neo-liberal Institute for Economic Affairs, and Politeia (1995) follows a political and economic philosophy supported by the Conservative frontbenchers on its advisory board. Thus, arguably the political topology of left and right continues to shape the think tank landscape in the UK to some extent. The proliferation of think tank numbers in the 1990s and 2000s and the slow but visible decentralisation of the British think tank landscape in the aftermath of devolution have not stimulated much academic debate. One of the few exceptions is Denham and Garnett s article which revisits think tanks and looks at them in the light of the end of ideology (Denham and Garnett 2006). This author s study of Scottish think tanks paints a bleak picture regarding the relevance of think tanks in Scotland s politics (Pautz 2007). Germany is not the best-researched country when it comes to think tanks. A good overview of the German think tank landscape was given by Martin Thunert (2008). There is barely any current research on the role of think tanks in the SPD s modernisation process with the exception of this author s study (Pautz 2008a). Scholars have paid more attention to other institutions that give policy advice, such as the information service for Members of Parliament (Backhaus-Maul 1990; Brown et al. 2006), governmental permanent commissions (Wiegard 2005) and parliamentary commissions (Altenhof 2002). Among the first to mention think tanks was Claus Leggewie, who depicted them as actors responsible for the neoliberal turn of federal government in the 1980s (Leggewie 1987). Just as in the British case, there are a number of think tanks identifiable as centre-left that are not discussed in this study because they were not found to be of significant relevance. For example, the Trade Union Congress Hans-Böckler Foundation has two research institutes under its roof that have contributed very little to the debate

6 THINK TANKS IN THE UNITED KINGDOM AND GERMANY 279 about the SPD s modernisation. This is not so surprising given the far weaker links between the German Social Democrats and unions compared to the UK. The political foundations that were found to vitalise and stabilise Germany s party system (von Vieregge 1980) are interesting phenomena in the German think tank landscape. Of these, the SPD-affiliated Friedrich-Ebert Foundation is discussed as an important participant in the SPD s modernisation debate. There have been a number of interesting developments in Germany s think tank landscape over the past decade. When the new centre-left federal government of Social Democrats and Greens took office in 1998, a new breed of political actors emerged in the form of public relation campaign organisations which advocated a return to the ordo-liberal market economy of the 1950s. Some of these campaigns were launched or supported by think tanks and deployed campaigning techniques usually associated with, for example, Greenpeace or Amnesty International. Examples are organisations with telling names such as the Foundation for the Rights of Future Generations and Deutschland Denken! this translates as Imagine Germany!. An example for the link between a think tank and such a campaign group is the Initiative New Social Market Economy. It was founded and sponsored by the metal industry employers association and was intellectually supported by the employers think tank Institute for the Economy (Leif and Speth 2006; Biermann and Klönne 2008). Over the past few years, think tanks have attracted attention from journalists in the context of recent labour market reforms (Klöpfer 2002; Grunenberg 2004) and some critical academic research (Plehwe and Walpen 1999; Schöller 2003; Wernicke and Bultmann 2007). More recently, governmental ad hoc commissions have been analysed as institutions, deployed by government, to facilitate policy change. Think tanks developed influence through these commissions (Färber 2005; Pautz 2008b). Management consultancies have increasingly acted like think tanks. While their role in public sector modernisation has come under journalistic scrutiny, there still exist only a few academic studies (Brosziewski 2003; Raffel 2006). How do the British and German think tank landscapes compare internationally? The US remains the global exemplar (McGann and Johnson 2005) for a think tank landscape in terms of numbers and funding. The UK and Germany have the most populous think tank landscapes and probably the most active think tank culture in Europe (Braml 2004). Thunert, for example, counted up to 130 think tanks in Germany (Thunert 2004), while a count in the UK reveals about 100 organisations. The British think tank landscape is more similar to that of the US than is the German think tank landscape: think tanks in the UK are more openly oriented towards advocacy and are more partisan, and German think tanks are more likely to receive money from government or government-affiliated organisations. Think Tanks and New Labour: Modernisation from Outside In the 1980s, the Labour party started a long and difficult modernisation process (Shaw 1994a) which culminated in the birth of New Labour in 1995 and in the adoption of the Third Way agenda beyond neo-liberalism and old social

7 280 HARTWIG PAUTZ democracy (Giddens 1998) as Labour s policy and programme guideline after When Neil Kinnock took over the party leadership in 1983 he started making a sustained effort... to relocate Labour within the mainstream of European Social Democracy (Wickham-Jones 2000, 12). Besides important organisational reforms designed to deprive delegates, unions and activists of power in favour of giving more power to the leadership (Jun 1996), one major plank of this effort was the policy review Meet the Challenge, Make the Change (Labour Party 1989). The review process demonstrated that thinking was changing: the recommendations significantly weakened the party s commitment to Keynesianism, nationalisation, redistribution and trade union rights. A strong emphasis was put on the need for improving the skills base in the UK to raise employability. Kinnock s successors, John Smith and Tony Blair, continued this supply-side modernisation course so that Labour largely finalised its modernisation before it won the 1997 election as New Labour. Thus, the party entered office with a policy agenda largely in tune with the party s wider political programme. In 1998, the party leadership made a further step towards the finalisation of modernisation by declaring that its policies were neither left nor right but, instead, followed a Third Way. The Third Way, later adopted by many European parties of the centre-left in content if not as a slogan, is a neo-revisionist (Merkel 2000) attempt to rethink policy objectives and instruments of social democracy. Advocates of the Third Way rejected the left s core objective of equality of outcome because they saw it not only as impossible to achieve but even as undesirable. Instead, equality of opportunity and social inclusion became the centre-left s main policy objectives. Therefore, welfare transfers would no longer be used to achieve de-commodification but money would be spent on welfare-to-work measures to get people into paid employment. The understanding of the role of the state changed significantly: it should restrict itself to activating and enabling its citizens to compete successfully in the labour market rather than providing an unconditional social security net. While the term Third Way itself was not granted a long lifespan, its core ideas remained the foundation of Labour policy under Blair (e.g. Blair 2006). This is, in a brief outline, how Labour became New Labour. How did think tanks play a part in this process? In the mid-1980s, senior Labour politicians felt that they needed additional intellectual support for their modernisation course as inner-party resistance to their centrist course was putting brakes on their efforts. Hence, financed by Labour-affiliated businesspeople and some trade unions, the Institute for Public Policy Research (IPPR) became operational in It was meant to act as an external stimulus for a revisionist discourse that would allow the modernising coalition to impose ideas top-down on to the party by establishing a new set of storylines striving for hegemony within Labour and by attracting new supporters from outside the party s traditional constituency. The IPPR was an institutionalised expression of Kinnock s frustration at the resistance of Old Labour proponents in the party s official policy-making institutions to further modernisation. While being de jure independent of Labour, the IPPR had very close connections to the party leadership: one example was the appointment of senior Labour figure Patricia Hewitt as think tank deputy director. Until 1989, she even kept working for the party from the outside, cutting and shearing the Policy Review, as Labour insider Phillip Gould reports (1998, 99). The think tank s work shows that it was strongly

8 THINK TANKS IN THE UNITED KINGDOM AND GERMANY 281 lobbying the party to abandon its long-held assumptions about state, market and ownership of the means of production (e.g. Blackstone et al. 1992). A crucial moment for the IPPR and its influence on Labour came with the Commission on Social Justice (CSJ) which Labour leader John Smith instigated in While the idea for this venture was thought up by IPPR and senior Labour figures, Smith officially asked the IPPR to facilitate a commission to rethink what social justice should mean and what policies should be put in place to rebuild British society. While Smith was taking personal ownership of the commission, de facto its remit gave it a flavour distinctly similar to the Policy Review (Taylor 1997, 140), whose failure to exorcise the party of its old habits had contributed to the 1992 election defeat at least that was the view of many in the Labour leadership. In reality, the commission was thus set up to speed up the modernisation process from outside and top-down. The CSJ was the most resource-intensive and high-profile project that the IPPR had had to manage to that date. The IPPR set up a secretariat for the commission, it contributed evidence like other organisations in the process of consultation and engaged in informal discussions with commissioners so that the think tank provided a kind of expert in-house resource (interview 1, IPPR 2007). While commissioners did not feel they were being leaned on by Smith or by the IPPR they were aware that Smith used the commission as a vehicle for his political strategy therefore the commission shied away from making proposals that could be a threat to making Labour electable again. If proposals were considered too Old Labour by the secretariat headed by David Miliband it quickly stifled them while also acting as a gatekeeper to ward off unwelcome influence from trade unions or Labour s left. It also informed Labour s leaders about the debates in the commission: things were being checked out with the party and when concrete policy proposals emerged in the final phase of the commission, the secretariat was perceived to be clearly articulating the views of the party leadership (interview 2, IPPR 2007). The commission s report speaks an early Third Way language. It tells the tale of three futures : that of the levellers, of the deregulators and that of the investors (CSJ 1994, 94). These metaphors for the old left, neo-liberalism and a new approach transcending the two were developed and pushed by the secretariat under David Miliband. He had been working closely with Anthony Giddens who was later to become the most vocal proponent of the Third Way and a confidante of Tony Blair s. The secretariat was particularly keen on associating the objective of equality of outcome with high taxation and thus as something that Labour should distance itself from if it wanted to convince the middle classes of its electability. In particular the simplistic juxtaposition of the three futures and its rhetoric broadside against Labour s egalitarian heritage an idea on which the secretariat insisted was something that some commissioners felt uneasy about but did not, ultimately, manage to omit from the report. The CSJ also proposed a number of more concrete policies: most importantly, it embraced a welfare-to-work agenda based on Australian examples as the best way towards creating a socially inclusive society. Both concepts welfare-to-work and social inclusion marked a further departure from earlier Labour policy and principles. The overarching storyline, that of the social

9 282 HARTWIG PAUTZ investment state, provided the framework to gather a new coalition of supporters around the Labour party that went beyond its traditional constituency. However, with John Smith s unexpected death in 1994 the commission s chances of influencing the party s political course grew slimmer as the new leadership tandem, Tony Blair and Gordon Brown, had not been involved in the commission and had never shown much interest in the IPPR either. Despite Blair s obsession with winning the battle of ideas (Gould 1998, 231), the commission was too much associated with Smith and thus almost Old Labour. Nonetheless, the report garnered significant media attention and Blair s rather lukewarm public endorsement. While commissioners at the time were convinced that their work was meaningless for the new party leadership, David Miliband s career move into Blair s circle of advisers gives substance to the analysis of the CSJ as a detailed blueprint for a renewed Social Democracy (Denham and Garnett 2004, 238) with an immediate influence on New Labour s vision of a modernised welfare-state (Fielding 2003, 184) which came to its conclusion with the Third Way. For the IPPR, the years after the CSJ were disappointing with regards to influencing the emerging New Labour party. Under a new director after 1994 Gerry Holtham, an occasional adviser to John Smith and therefore almost a relic of old times and with Miliband and Hewitt leaving the think tank, the IPPR neither had much influence on the piazza nor on the palazzo, as a senior IPPR analyst referred to the public and the party (interview 2, IPPR 2007). The distance between the Labour party and the IPPR grew especially after the think tank had managed to convince leading businesspeople to accept the necessity of a national minimum wage through its Commission for British Business and Public Policy (IPPR 1997). Some in New Labour s leadership had hoped that the minimum wage would disappear from their party s agenda and found the IPPR s commitment to it irritating. In the IPPR s place, a new think tank emerged to be publicly associated with the genesis of New Labour: Demos, founded in Its predecessor organisation was the journal Marxism Today in which Tony Blair had occasionally published in the late 1980s (Blank 2003). Openly disaffected by Labourism, Demos rejected the validity of left right thinking, advocated thinking for what it called New Times and thus was an ideal partner for those who wanted to place Labour firmly in the political centre. Demos style was different to the IPPR in that it did not have as much interest in proposing concrete policies. In a sense, Demos was therefore more useful to Labour modernisers because the ideas it provided were generic enough to make it difficult for Conservative politicians or hostile journalists to attack them and thus to attack them as Labour policy in the making and were eye-catching enough to present those associated with Demos as modernisers. The close relationship between Blair and Demos first chairman Geoff Mulgan this relationship dated back to Mulgan s prolific writing for Marxism Today and led to Mulgan becoming Policy Director at 10 Downing Street in 1997 demonstrated Labour s determination not to risk public controversy about its policy agenda: it ensured that Demos, as an organisation associated with Labour, would not publish policy ideas out of line with official party policy. During these years, it became clear that unless a think tank was willing to relinquish its intellectual independence and work closely with party leaders it could not become an intellectual companion (Denham and Garnett 1998).

10 THINK TANKS IN THE UNITED KINGDOM AND GERMANY 283 This also applied to a university-affiliated think tank the Centre for Economic Performance (CEP) at the London School for Economics and Political Science (LSE). Since its foundation in 1990 it was inspired by the demands of the Department of Education and Science for more external expertise and took LSE into a very practical direction as the LSE s director wrote (Dahrendorf 1995, 507) under its director Richard Layard the CEP had been advocating active labour market policies based on Scandinavian models. Layard, like many academics at the LSE, had been disaffected by the leftist shift of Labour in the 1980s (Desai 1994; Layard 1999). Only towards the early 1990s did links between him and others at the LSE with Labour intensify again. The LSE, founded by Fabians to base Labour policy on evidence and to raise awareness of social problems, again began fulfilling think tank functions for the party. While research at the CEP continued to produce work on the need for social policy reform with all the prestige of the LSE vested in it Layard and others at the CEP worked closely with those who were writing the 1997 Labour manifesto and contributed to the welfare-to-work programme of the New Deal that featured prominently in Labour s election campaign (Labour Party 1997; Layard, 1997a and 1997b). Gordon Brown s praise for Layard as the most influential economic thinker for the Labour party (Brown 1997) therefore comes as no surprise. Providing such policy proposals under their control was what New Labour leaders wanted from external advisers. They wanted advisers who had little desire or pressure to think the unthinkable to gain the public attention necessary to convince potential funders that their work actually was influential. An institution such as the CEP, funded largely by public monies, was under no such pressures. What happened after New Labour came to power? Were think tanks still of relevance to the party s intellectual development? Looking at the party s programmatic debate it seems that little has been happening ever since it came to power. The Third Way debate had been prepared in the mid-1990s and it was Anthony Giddens from the LSE who became its main proponent (e.g. Giddens 1998), while an analysis of think tank publications shows that Demos, the IPPR and the Fabian Society contributed little to the Third Way concept as such and barely used the term. After 1997, the Labour party was increasingly downgraded to an election campaign machine. This process of hollowing out is not new: Eric Shaw argues that since 1983 Labour s party-internal policy-making machinery, in particular the National Executive Committee, had been systematically stripped of its powers and resources and the shadow cabinet and the leader himself had assumed policyformulating powers. Labour, which had been characterised by the institutionalised dispersal of powers and by internal pluralism, had come under control of the centralised authority of a small leadership group (Shaw 1994b, 122). Therefore, the party apparatus itself was not of much relevance for think tanks. There had been expectations among think tank analysts and academics that the new government would be keen on a regular intellectual exchange. But these hopes were disappointed. With the full power of Whitehall behind it, external advice from thinly staffed think tanks was not required by government. Where external input was wanted, think tanks fulfilled their revolving door function so that analysts from the IPPR and Demos moved into government as special advisers political civil servants to bring their expertise and new ways of thinking into the permanent civil service. The CEP succeeded, through such moves but

11 284 HARTWIG PAUTZ mostly through its continued work with government, to allow the Centre unparalleled access to data and government expertise otherwise unavailable (CEP 2003, 6). The IPPR and Demos shifted their focus from governmental to nongovernmental partners. They began adopting an often more critical stance towards the government, in particular in relation to its strategy for the reduction of poverty (e.g. Robinson 2001), and decided to distance themselves from government and party so that they would be able to co-operate with other political groupings, funding organisations and future governments of different political persuasions. The IPPR, Demos and the CEP contributed to the formation of a discourse coalition around the storyline of the social investment state and helped this discourse coalition to gain hegemony within Labour. Think tanks made contributions to achieving discursive closure (Hajer 1995) by delegitimising the idea that equality of outcome was a desirable objective for the Labour party. The IPPR was the most important think tank in the immediate years before Labour became New Labour. It succeeded in helping Labour to regain self-confidence, to recoup the support of centre-left intellectuals and to build public trust in Labour. It contributed to Labour s paradigm shift from a concern with equality to a focus on social inclusion and equality of opportunity (Lister 1998, p. 217). The institutionalisation of the New Times debate in think tank Demos contributed to strengthening the conviction of many in Labour s leadership that their party needed to distance itself from its own past. Demos understood very well that especially Blair wanted intellectual companionship to strengthen his conviction that fundamental change was needed. In the 1990s, the LSE again became a hothouse of ideas for the centre-left. Despite the CEP being a university institute it should be considered a think tank as it has fulfilled think tank functions. As an analysis of the CEP s output and selfunderstanding shows, the purpose of the CEP has been wanting to be out there and wanting to create policy on the basis of its own interpretation of centre-left values (interview 4, FES 2006; CEP 2003). The SPD and External Expertise: An Uneasy Relationship Unlike Labour, the SPD had not finished its Third Way modernisation before coming to government. The SPD began a substantial official programme revision after it entered a federal coalition government with the Green party as its junior partner in Only during the run-up to the elections did a modernisation debate start that touched upon image more than programme or policy. In late 1997, the SPD re-branded itself as the party of the New Centre in an attempt to emulate New Labour s appeal to middle England (Busch and Manow 2001) and adopted a proto-third Way discourse. However, while Gerhard Schröder s government embarked on a social policy course that in many aspects was diametrically opposed to the SPD s left-leaning 1989 Berlin Programme, the party s tentative programmatic debate stopped after the election victory. A year after taking over power in Berlin and after a failed attempt to dictate Third Way modernisation top-down with the Schröder-Blair paper from 1999 (Schröder and Blair 1999), Schröder instigated an official programme debate to bring his party into line with the supposed realities of being in government (Schröder 2006). The official Programme Debate, launched in late 1999, was dominated by themes and arguments familiar from the

12 THINK TANKS IN THE UNITED KINGDOM AND GERMANY 285 British Third Way debate and by those in favour of a centrist relocation of their party (Pautz 2009). The labour market and welfare state reforms that Schröder s government had started in 1998 had an impact on the debate. In particular Agenda 2010 a set of welfare-to-work reforms from 2003 under the theme of the activating state proved to be a catalyst for the SPD s programmatic modernisation. Agenda 2010 was integrated into the SPD s 2005 federal election manifesto as part of the party s newly adopted policy objective of creating a Soziale Demokratie in Germany (SPD 2005). The Programme Debate ended, after several suspensions and under three different party presidents, in 2007 with the adoption of the Hamburg Programme (SPD 2007). The new programme follows the Third Way course. It embraces productive inequalities of outcome as long as they are not large inequalities that limit freedom and capabilities of others (SPD 2007, 16). The state is redefined as an enabling and preventative state which holds the individual to their responsibility to be in paid work and to continuously re-train to adapt to the ever-changing demands of the labour market. This is, in a brief outline, how the SPD slowly edged towards a Third Way approach to social policy. How did think tanks play a part in this process? There were, in particular, two think tanks the Friedrich-Ebert Foundation (FES) and the Social Science Centre Berlin (WZB) of direct significance for the party s official Programme Debate itself. However, further think tanks played an indirect role in the SPD s modernisation through their intense involvement in the making of Agenda These think tanks the Bertelsmann Foundation and two management consultancies can only be discussed in passing due to the limited nature of this article and have been discussed elsewhere (e.g. Fleckenstein 2004; Patzwaldt 2008; Pautz 2008b). The FES symbolises the state-centred nature of Germany s think tank landscape and its less dynamic nature compared to the UK. FES is the largest of the six charitable, political party-associated foundations in Germany. It depends overwhelmingly on public monies allocated according to the share of votes gained by the associated party in previous Bundestag elections. It therefore has an intrinsic interest in the party s electoral performance while it is constitutionally obliged to remain above party politics. Originally an educational institution for the working class, today the FES spends most of its budget on overseas developmental aid and on political education. Only 10 to 20 per cent of the FES budget is allocated to think tank activities. Yet, the FES defines itself as a think-tank [that] provides analysis and research for political and economical elites (FES 2005, 5) and senior SPD politicians have praised it for providing long-term thinking for their party (Müntefering 2004; Schröder 2004). How has the FES provided the SPD with ideas for programme and policy, given the legal constraints that it operates under? In the early 1990s, it started trying to turn the attention of Social Democratic policy elites to international approaches in employment and labour market policy (Thunert 2000, 208). One example is the Future Commission ( ). Consisting of academics, it was set up by a group of modernisers around Oskar Lafontaine who had been in charge of the debate for the Berlin Programme. After the SPD s disastrous defeat in the first all-german federal elections of 1990 Lafontaine was the party s contender for the chancellorship

13 286 HARTWIG PAUTZ Lafontaine partly relinquished his traditional positions on social and labour market policy and sought to use the foundation as a motor for policy renewal. After all, in the 1970s the FES had already assisted the party leadership in warding off the resurgence of the Marxist wing of the party (von Vieregge 1980). The legal position of the foundation vis-à-vis the SPD made it impossible for Lafontaine to influence the commission or associate himself with it like John Smith did with the CSJ. However, with FES economist Christa Müller married to Oskar Lafontaine being the leading member of the commission s secretariat at the FES and one of his closest advisers, commissioners felt as if Lafontaine was sitting at the table with them (interview 4, FES 2006). Lafontaine s interest in the commission s work faded when he ousted the party president only a few months after the commission had first convened. In his new role, Lafontaine preferred undermin[ing] the Federal government s legislative programme to profile the SPD (Lees 2000, 90) over elaborating long-term programmes. No other senior Social Democrat showed interest in the commission s work and no one made the report their own when it was published just before the 1998 federal elections. The FES itself made little effort to publicise the results so that commissioners were under the impression that the think tank wanted to dissociate itself from their report. Why? The proposals did not suit Lafontaine in his new role as a traditional Social Democrat which he had assumed when his party decided in March 1998 that the telegenic Blair admirer Gerhard Schröder should run for the chancellorship. Spelling out the end of the Modell Deutschland a synonym for the link of international competitiveness with relative domestic income equality and a relatively dense net of social security many of the commission s proposals to reform the labour market and the welfare system had been rejected by trade unions and the party s traditionalists because they followed the supply-side agenda later encapsulated in the Third Way. Establishing a subsidised low-wage labour market for the low-skilled and long-term unemployed to abolish the unemployment trap and introducing a minimum wage below national wage levels was perceived as an incursion into bargaining autonomy and as a step towards the dismantling of the welfare state which the commission accused of offering unsustainable welfare without work (Zukunftskommission 1998, 248). Germany s welfare state and labour market policies should travel a third way (Zukunftskommission 1998, 290). So close to the elections the relatively concrete proposals of the commission were seen as a threat to the SPD s difficult attempt to be modern and traditional at the same time as embodied in the dualism of Schröder and Lafontaine. Given the lack of media impact and the lack of support from senior Social Democrats, should the think tank s commission be evaluated as a total failure? The commission contributed to the formation of a labour market and social policy agenda which intellectually supported the coalition of party modernisers and weakened the discursive hold of traditionalists. It also contributed to the formation of a circle of advisers who became intellectual companions of the modernisers. Lastly, some of the proposals for labour market reform reappeared a few years later in the work of two governmental expert groups: the Benchmarking Group ( ) and the Hartz Commission (2002). These were crucial for preparing and formulating policies that constituted the core of Agenda 2010 (Kemmerling and Bruttel 2005; Pautz 2008b).

14 THINK TANKS IN THE UNITED KINGDOM AND GERMANY 287 While the immediate impact of the commission was a disappointment for the FES, the think tank influenced the party s debates through other channels. A good example is the Managerkreis or Manager Circle. It is organisationally attached to the FES but legally and financially independent. Business leaders have used it to communicate their concerns to senior Social Democrats and after 1998 to ministers and the chancellor himself. Politically close to the party s modernisers, prior to the 1998 elections the Managerkreis endorsed the SPD as the only party able to break up Germany s ossified structures while cautioning Social Democrats that a supply-side politics of the left should replace Keynesian economics (Managerkreis 1998). Once the SPD was in power, the activities of the Managerkreis increased in line with its membership. Of particular importance for the Managerkreis activities were the background talks that the FES organised: because the Managerkreis is independent of the FES, there is no obligation to make the contents of these talks public. The Managerkreis showed little interest in directly informing the SPD s official Programme Debate but actively accompanied the debate about Agenda 2010 and warned Social Democrats that redistributive policies would only lead to injustices due to their impact on the economy (Managerkreis 2003). The FES appreciates the Managerkreis as a bulwark against temptations within the SPD to leave its centrist course. Managerkreis and the FES numerous conferences, workshops and publications targeting trade unionists, works councils and the party s middle strata of functionaries rather than the general public were aimed at garnering support for Schröder s deeply unpopular labour market reform by establishing a discourse that constructed Agenda 2010 and social democratic values as compatible. While the FES in fact became the governing foundation as it was termed by one think tank analyst (interview 5, FES 2006) by turning much of its attention to bestowing legitimacy on the government s policy agenda, it also played a role in the SPD s Programme Debate. Acting as a gatekeeper to external influences, a programme commission chaired by the party president, exclusively constituted of party members and reflecting the various party factions, controlled the debate. The FES indirectly contributed to the debate as one of its senior analysts was a member of the programme commission and channelled the foundation s expertise into the debate. Thomas Meyer, one of the most influential advisors to the SPD (Jun 2004, 263), had been advocating his concept of Soziale Demokratie for years. Not only is it the FES motto, it has also been proposed by Meyer as a replacement for the SPD s long-standing commitment to democratic socialism (e.g. Meyer 1991) which has a prominent place in the Berlin Programme. Together with Wolfgang Merkel, an analyst from the think tank WZB, who had been advocating modern social justice policies based on his research on social democratic governments for years, Meyer emphasised in his work that modern social democrats should abandon their fixation on equality of outcome and should focus on equality of opportunity and on reducing poverty (e.g. Meyer 1998 and 2005; Merkel 2006). This is a good moment to point out the close links between the FES and the WZB. The WZB was founded in 1969 by a cross-party group of members of the Bundestag and of the Berlin House of Deputies and was meant to be a German version of the Brookings Institution (Thunert 2004). It was an important source of advice for the

15 288 HARTWIG PAUTZ Social Democrat-led federal government of the 1970s and its planning euphoria (Altenmüller 1994). Being mostly publicly funded, the WZB defines its task as informing decision-makers (WZB 2004), and many of its analysts explicitly want to contribute to breaking up Germany s ossified structures and to neutralise the egotism of organised interests stifling the country, as one researcher put it (Konrad 2004). Not only did work carried out at the WZB support the FES contributions to a new perspective on Social Democratic policy objectives, it also directly influenced the party s policy in government and thus the party s programmatic discourse. One of Germany s most respected scholars of international labour market policies, the WZB s Günther Schmid, joined the Benchmarking Group in 2000 and was a member of the Hartz Commission. Thanks to his involvement, international labour market policy approaches became more acknowledged by the relevant actors in Germany s neo-corporatist labour market policy process. Similar to the CEP, Schmid s work with government allowed the WZB unprecedented access to governmental labour market data (Patzwaldt 2008, 230). Furthermore, the WZB contributed to establishing something like a Third Way International. In 2000, the Chancellery asked the WZB to organise an academic conference to accompany a gathering of 14 heads of state and government who had come together under the slogan of Progressive Governance. This term had evolved as the successor to that of the Third Way in The conference contributed to the establishment of the Policy Network: a transnational think tank based in London. An example of how a particular faction of the SPD sought support from the WZB and the FES is the Netzwerk or Network Berlin, a group of younger MPs who favour a Third Way modernisation of their party. In 2003, when Agenda 2010 was causing immense controversy within the SPD and the public, the Netzwerk contributed a manifesto The new SPD to the debate. This document was the result of a workshop that the FES had organised. Netzwerk members discussed with members of the Hartz Commission and the Benchmarking Group, veterans of the Future Commission and analysts from the FES and the WZB. While promoting a rights and responsibilities discourse with respect to labour market and social policy they also adopted John Rawls theory of justice and Meyer s concept of Soziale Demokratie (Netzwerk 2004). This article focuses on party programmatic debate rather than on governmental policy-making. However, as emphasised earlier, one cannot be separated from the other as the governmental agenda pushed the SPD s programmatic modernisation. Schröder s labour market and social policy and its third order change to some significant degree were influenced by government-external actors (Gohr 2003; Blancke and Schmidt 2003). As mentioned before, the two most important fora for deliberating policy and creating consensus among policy field stakeholders in Germany s semi-sovereign state constrained by federalism, strong interest associations, powerful courts and dense international obligations (Katzenstein 1987) were the Benchmarking Group and the Hartz Commission. The FES Future Commission report provided the intellectual basis for proposals by, first, the Benchmarking Group and then the Hartz Commission, on low-wage labour markets and income subsidies. The Bertelsmann Foundation, Germany s best-resourced private

16 THINK TANKS IN THE UNITED KINGDOM AND GERMANY 289 think tank, financed and staffed the Benchmarking Group and contributed valuable data and proposals to both the Benchmarking Group and the Hartz Commission and evolved into one of the Schröder government s most appreciated partners (Pautz 2008b). Management consultancies namely McKinsey & Company and Roland Berger Strategy Consultants were leading partners in the Hartz Commission through which they reached the apex of their involvement in governmental policy-making (Pautz 2008a). To conclude, the concordance method showed that think tanks contributed to the construction of a Third Way discourse coalition which gathered around the storyline of the activating state. The FES, as the most active think tank, facilitated a modernisation discourse, contributed to the formation of an expert community and discursively legitimated the government s reform agenda. The WZB was an important source of policy advice for the Red Green government and thus influenced the party s programmatic course. Conclusion Even though this article could not offer an all-encompassing supply-side account of ideology (Desai 1994, 12) of the exchanges between politicians and think tanks, the application of the concordance method indicates that the think tanks in question played an important role in the process of bringing about third order change of policy objectives at a time when the Labour party and the SPD were in electoral and ideological crisis. The concept of the discourse coalition helped to explain how party programme and policy changed by highlighting the variety of actors involved of which think tanks were only one and by using the metaphor of the storyline. The article provided a description of actual think tank activity to show how they do what they do and thus showed that the different political structures in the UK and Germany have influenced how think tanks could become effective. It supports Gellner s contention (Gellner 1995) that if political parties are no longer able to provide their own valid orientational knowledge, think tanks can partly fill this gap. It also supports Hall s contention that external expertise can support third order change in paradigmatic crisis. The study shows that think tanks in the UK were more intensely involved in Labour s modernisation process while in opposition than in the German case. The IPPR and Demos provided a modernising narrative to successive generations of Labour leaders and prepared the 1990s Third Way concept. The CSJ is a good example for how a think tank can act as a facilitator of policy learning and shows that a think tank can be a participant in its own right in the policy process rather than a mere bridge-builder between other policy field stakeholders (Stone 2007). In Germany, the FES work on Soziale Demokratie influenced the SPD s programmatic debate but generally external expertise, if sought by the modernising party elite, was not successful in circumventing the party s policy-making structures while in opposition. In both countries, yet to different degrees, think tanks helped to embed welfare-to-work policies in a new social democratic narrative. Labour in opposition was structurally more receptive to policy advice than the SPD, and Labour leaders were more interested in external input than their German

17 290 HARTWIG PAUTZ counterparts because the policy-making capabilities of the party itself had been depleted. The SPD s party-internal programme-making structures are both stronger and more fragmented than Labour s and proved more resilient to attempts by party leaders to impose a particular discourse on the debate top-down by deploying external expertise. The SPD s persisting loosely coupled anarchy of various independent organisational levels and of a diverse membership (Jun 1996; Lösche 1998) made it more difficult for the party leadership to embark on a modernisation course. Therefore, the party has been compared to a sluggish tanker (Glotz 1982). Like Labour, the SPD has understood itself historically as a policy-seeking party (Padgett and Paterson 1991; Von Lucke 2007) but unlike Labour has maintained structures that make its programme development largely reliant on internal policymaking bodies while the policy-making power of its leadership has remained more limited than Labour s. The degree to which external expertise was able to contribute to policy and programme debates depended on the strength of internal policymaking structures to act as filters and gatekeepers and on the propensity of the respective leaders to use advice. Labour leaders realised more clearly that efforts to mediate the need for modernisation to the party rank and file, to its middle strata functionaries, to affiliated organisations like the trade unions and to the public were necessary for a successful modernisation process. Schröder largely ignored the need to link discursively governmental policy and party identity. In both countries think tanks supported the party leadership in its attempts to circumvent party-internal power holders perceived as blocking modernisation. Arguably, Labour s ideological sense of crisis was more developed than that of the SPD. It had more ground to catch up on after the leftward shift in the 1980s. Furthermore, the neo-liberal ideology and policy pursued by Thatcher and Major had far weaker equivalents in Germany. Proving Hall s contention that external expertise can support third order change, Demos and the IPPR were born while in Germany no new think tank emerged in support of the ailing SPD. The different political systems left the oppositional parties in Westminster and in the Bundestag in different degrees of powerlessness so that the pressure to modernise was not as starkly felt in the SPD compared to Labour. This resulted in a party leadership keen to create the programmatic basis for electoral success by moving Labour into the centre-ground already in the 1980s. The study showed that Labour rebuilt its relationship with intellectuals in the late 1980s and early 1990s and consciously involved think tanks in its programmatic modernisation. The SPD seemed structurally insulated from evolving discourses on welfare state and labour market policy while in opposition. Only when the SPD came to power in Berlin did Schröder s governmental course open the SPD to more thorough programmatic reform and thus often indirectly to external policy expertise. About the Author Hartwig Pautz, Department of Economic Studies and International Business, Glasgow Caledonian University, Caledonian Business School, Glasgow G0BA, UK, Bibliography Altenhof, R. (2002) Die Enquête-Kommissionen des Deutschen Bundestages (Wiesbaden: Westdeutscher Verlag).

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